Tuesday, September 25, 2018
Piper sees early winners from annual list of new codes from CMS
The Centers for Medicare & Medicaid Services published its annual list of new codes ahead of the final rate determination including 99 codes, Piper Jaffray analyst William Quirk tells investors in a research note. He says Genomic Health (GHDX), LabCorp (LH), Myriad Genetics (MYGN), Natera (NTRA) and Quest Diagnostics (DGX) look like early winners in the 2019 Preliminary Clinical Laboratory Fee Schedule Fee Schedule determinations, with an incrementally positive competitive move for CareDx (CDNA). The analyst notes that Genomic Health received increased reimbursement for a couple tests and CareDx competitor TAI Diagnostics ends up with a likely longer pathway to reimbursement.
https://thefly.com/landingPageNews.php?id=2794795
Monday, September 24, 2018
Underinvestment in medtech threatens sector growth – EY
In its 2018 report on medical technology, Pulse of the industry, EY states that short-term growth is prioritised over long-term growth, with R&D suffering as a result.
This is despite aggregate revenue for the industry hitting new heights in 2017. Growth was only 4%, contrasting sharply with the 15% average annual growth rate achieved between 2000 and 2007.
In fact, medtech companies returned $16.4 billion to investors in buybacks and dividends last year, compared to $15.9 billion invested in R&D activities.
Pamela Spence, EY global life sciences industry leader, said, “Medtechs must invest in new data and customer-centric capabilities to build stronger ties with consumers or risk being ousted by technology companies and other entrants from outside the sector.
“To succeed in the digital future, medtechs will be judged not only on the safety and efficacy of their devices and tests, but on their ability to capture and deploy insights from these products to inform care delivery, with a growing emphasis on coordinated care.”
Technology companies – as opposed to medtech firms – are well placed to capitalise on the industry’s shifting balance of power, the report states. This is because patients are increasingly taking on an active role in their healthcare by wearing sensors, through using apps and via other digital interfaces.
One example is Apple’s watch, which incorporates an electrical heart rate sensor that can take an electrocardiogram (ECG) using an app that has been granted a ‘de novo’ classification by the US Food and Drug Administration (FDA).
Another point highlighted is the importance of data. The latter, states EY, will replace devices as the key value driver in medtech, with new market entrants benefiting over medtech companies if they fail to accelerate their digital agendas.
Jim Welch, life sciences advisory partner, Ernst & Young LLP, said medtechs have a ‘unique’ opportunity to capitalise on the progress made in the digital arena, particularly as they have strong connections with healthcare stakeholders.
But, he warned, “What they don’t have is in-house capabilities to develop personalized health care offerings. To change this, medtechs need to continue to be efficient with their capital, and prioritize shedding non-core assets. They must also invest more in digital collaborations that expand their customer experience and data and analytics capabilities so that they can get even closer to patients.”
Novartis, Bayer eye appeal as UK court OKs Avastin for macular degeneration
England’s High Court has ruled it is lawful to use Roche’s Avastin (bevacizumab) in an unlicensed use in wet age-related macular degeneration (AMD) instead of more expensive approved drugs from Novartis and Bayer.
While NHS organisations welcomed the judgement on the grounds that it will save money, the drug companies said they are considering an appeal against the decision, arguing it undermines the EU’s regulatory system for medicines.
Avastin is licensed as a cancer drug, where it works by attacking the blood vessels that feed oxygen to tumours.
But this mechanism of action means it can also work in wet AMD, which is caused by abnormal growth of blood vessels in the back of the eye, causing blurring or loss of vision in the centre of the field of vision.
Novartis’ Lucentis (ranibizumab) and Bayer’s Eylea (aflibercept) are approved in wet AMD, but Avastin’s manufacturer Roche has never applied for a licence in ophthalmology.
But an independent trial by the US National Institutes of Health in 2012 found that Avastin was as effective as Lucentis in treating wet AMD, although serious adverse events were slightly more common with the Roche drug than with Lucentis.
The trial paved the way for off-label use of Avastin in wet AMD, at a much lower price as it is administered at around 1/500th of the dose used in oncology indications.
In England, 12 clinical commissioning groups had been using Avastin in wet AMD, and Novartis and Bayer called for a judicial review in a bid to make them use more expensive licensed alternatives.
Bayer and Novartis issued tersely-worded statements, saying they were considering an appeal against the decision, where the High Court ruled that Avastin could be used lawfully as part of a policy to save costs.
Describing the decision as a “setback for public health,” Bayer added that “the ruling prioritises the cost of medication over doctors’ clinical judgement and expertise, as well as over the regulatory assessment of a medicine’s quality, efficacy and safety.
“Bevacizumab, marketed as Avastin for the treatment of cancer, is not manufactured or licensed for use in the eye. A service using this product risks increasing the number of clinic visits and injections a patient needs for proper monitoring of their conditions and for sight-saving treatment, placing more strain on NHS services and the already stretched workload of NHS staff.”
Novartis made a similar argument in its statement, saying the ruling “threatens to jeopardise a world-leading system that has protected patients for many years by ensuring medicines have been tested rigorously and carefully scrutinised for delivering value.”
Dr Sheuli Porkess, deputy chief scientific advisor to the Association of the British Pharmaceutical Industry (ABPI), said: “We will consider this judgement carefully. Patients and doctors need total clarity on who determines whether medicines work and are safe to be used.
“This extraordinary judgement potentially undermines the regulation of all medicines and by doing that, neither patients nor doctors have clarity on what information to trust.”
David Hambleton, chief executive officer of NHS South Tyneside clinical commissioning group (CCG), one of the NHS groups involved in the case, welcomed the judgement.
He told the BBC: “We’ve always said we think that it’s important that patients should have the choice of a very effective treatment for wet AMD, and it’s actually a fraction of the cost of the other alternatives.
“So I think what we do now is offer patients that choice. We believe that they will support very strongly having a cost-effective, safe treatment and saving the NHS generally a lot of money. It is a victory for common sense over commercial interests.”
Loxo Oncology granted orphan status for solid tumors treatment
The FDA granted Loxo Oncology orphan status for its treatment of solid tumors with neurotrophic tyrosine receptor kinase-fusion proteins.
https://thefly.com/landingPageNews.php?id=2794783
Labs lose challenge to multi-billion Medicare cut
A group of clinical laboratories on Friday lost their legal challenge to a multibillion-dollar Medicare reimbursement cut.
U.S. District Judge Amy Berman Jackson dismissed the complaint Friday, saying the laboratories can’t challenge the lost reimbursement funding in court.
“While the court acknowledges that plaintiff’s arguments on the merits raise important questions … Congress expressly precluded judicial review of issues such as these, and the court has no jurisdiction to hear the case,” Jackson wrote in her decision.
The labs expect to lose $670 million this year after the CMS changed its pay rates to match private payer rates for the tests. The cut will equal $4 billion over 10 years.
The reimbursement change stemmed from the Protecting Access to Medicare Act of 2014. The switch was made final in a rule released last year and went into effect on Jan. 1.
The American Clinical Laboratory Association, a trade group for clinical labs, sued the CMS in December over the planned cuts, claiming the agency ignored congressional intent and instituted a flawed data-reporting process in advance of setting market rates under the law.
“This is an extremely disappointing outcome for ACLA’s members and the millions of seniors they serve—including the most vulnerable Medicare beneficiaries—who rely on clinical laboratory tests for their most basic health needs,” ACLA President Julie Khani said in a statement.
Industry groups have argued that the CMS set the pay rates based on data from labs with the biggest test volumes that receive the highest discounts from test manufacturers. If the CMS surveyed more labs, the groups claim the cuts would be much smaller.
Khani is concerned the change could cause serious financial harm to thousands of laboratories and make it harder for Medicare beneficiaries to get access to medical testing, particularly in remote rural areas and in nursing homes that depend on laboratory testing services.
The Congressional Budget Office, assuming more labs would be surveyed, estimated that the Protecting Access to Medicare Act would cut Medicare spending by $100 million in the first year of the new rates and by $2.5 billion over 10 years.
The ACLA and its members are considering appealing Judge Jackson’s ruling. For now, the trade group hopes Congress will reform and modernize the clinical lab fee schedule to address the issue.
Medicare’s fee schedule for lab tests has been largely unchanged since it was established in 1984. Each lab determines its own rates based on market prices. Medicare has historically paid 18% to 30% more than other insurers for some tests, HHS’ Office of Inspector General found. The program shells out about $7 billion a year for clinical diagnostic laboratory tests.
The clinical labs took issue with the CMS’ decision to exempt many labs from reporting what private insurance companies were paying for tests. The CMS said the decision was an attempt to reduce regulatory burdens. HHS’ Office of Inspector General initially estimated the rule would apply to approximately 12,000 laboratories, but only 2,000 reported data.
Tesaro initiated at Leerink
Tesaro initiated with an Outperform at Leerink. Leerink analyst Andrew Berens started Tesaro with an Outperform rating and $48 price target.
Loxo Oncology initiated at Leerink
Loxo Oncology initiated with an Outperform at Leerink. Leerink analyst Andrew Berens started Loxo Oncology with an Outperform rating and $205 price target.
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